Going by the available data, the US economy still seems to be hardly tattering on its way towards recovery. With employment stuck above 8% and the growth sinking deep below 2%, the only spot where any activity was witnessed recently was in the Wall Street.
The great moment in modern monetary history, the greatest since the Wall Street blues of September 2008 was created during September 2012. On 13th September, Ben Bernanke promised to buy as much bonds as necessary without limit, till the US approaches the level of full employment. A week later, Angela Markel affirms her support to the European Central Bank to purchase as much of sovereign debt as necessary to prevent the fears of a Euro-union break up. Bank of Japan too extended its asset purchasing programme. All the three Central Banks have, in other words, consented to printing currency without limits this time.
Similar quantitative easing has been conducted by the US Fed in the past, but not much has come out of it.
Throwing inflation targets to wind, putting lots of money with the banks, only time will tell whether it will boost the economies like it did in the pre-1970 era.
The great moment in modern monetary history, the greatest since the Wall Street blues of September 2008 was created during September 2012. On 13th September, Ben Bernanke promised to buy as much bonds as necessary without limit, till the US approaches the level of full employment. A week later, Angela Markel affirms her support to the European Central Bank to purchase as much of sovereign debt as necessary to prevent the fears of a Euro-union break up. Bank of Japan too extended its asset purchasing programme. All the three Central Banks have, in other words, consented to printing currency without limits this time.
Similar quantitative easing has been conducted by the US Fed in the past, but not much has come out of it.
Throwing inflation targets to wind, putting lots of money with the banks, only time will tell whether it will boost the economies like it did in the pre-1970 era.
But one thing which is clearly visible is the increase in stock and bond prices. Is the new printed money being re-distributed in the hands of the Wall Street participants! Is the new money parked with banks responsible for inflating the asset prices or is it really moving the economies out of the shambles they have been in of late! Or will it indeed help in reducing the long term mortgage rates.
I doubt.
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